Part of our mission at the Institute for Business and Social Impact is to shed light on the interplay between for-profit business, the public sector and urgent public problems.
In a recent column for the New York Times, Laura D. Tyson examines that interplay in the current political debate about raising the federal minimum wage.
Contrary to popular perceptions, the minimum wage is not simply an issue for teenagers who live with their parents and hold part-time jobs to pay for movies and clothing. As Tyson points out, the biggest demographic group of minimum-wage workers is adult women — many of whom are working mothers. The minimum wage is both a women’s issue and a family issue.
You can read Tyson’s entire column, but here are some key statistics:
*Women make up less than half the nation’s workforce, but 75 percent of workers in the 10 lowest-paying occupations and 60 percent of people who earn the minimum wage.
*About three-quarters of female minimum wage workers are above the age of 20, and about three-quarters of those women live without support from a working spouse.
*The single biggest demographic group of minimum-wage workers is not teenagers, but adult women.
*Women head up 7.1 million working families, and about 58 percent of those families are low-income. About 65 percent of the children in female-headed working families are low-income.
*A full-time working mother with two children who earns the federal minimum wage of $7.25 an hour makes less than $14,500 year – more than $4,000 below the poverty line.
*Adjusted for inflation, the current minimum wage is lower today than it was in 1968.
*Women comprise two-thirds of workers who rely primarily on tips.
*The federal minimum wage for tipped income is only $2.13 an hour – and has been frozen at that level for 21 years. During the 1980s, the tipped minimum wage equaled about 70 percent of the normal minimum wage. Today, it is less than 30 percent of the regular minimum wage.
The minimum wage also affects the efficiency of two major anti-poverty programs: the Earned Income Tax Credit, or E.I.T.C., and the Child Tax Credit. Together, the two refundable credits provide extra money to 32 million working families and lift about 10.1 people of all ages out of poverty.
But in the absence of a solid floor on wages, those tax credits make it easier for employers to pay less in wages themselves. If employers know that workers will reap extra money from the E.I.T.C, they can offer less than the market wage to get the workers they want. According to one recent study, about 30 cents out of every dollar provided through the E.I.T.C. ultimately flows back to employers in the form of lower wages.
Opponents of a higher minimum wage, including most Republicans in Congress, argue that it would lead to higher unemployment. But as Tyson pointed out earlier this year, a raft of rigorous studies has largely debunked those arguments in connection with proposals to raise the U.S. minimum wage to $10 an hour.